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For Immediate Release
CONNECTICUT MANUFACTURERS DOING ALL THEY CAN TO SUCCEED BUT NEED LEGISLATIVE AND REGULATORY HELP TO CONTROL COSTS Manufacturers continue to innovate and adapt to meet ever-increasing competitive demands so they can succeed and recover from the most recent recession. But they also need legislative help to control costs such as taxes and health care costs, and balance the needs of citizens with the requirements of Connecticut businesses. Without assistance, manufacturers say job growth will remain slow, primarily due to the high cost of health benefits and the shortage of skilled workers. Those are some of the key findings in the manufacturing component of the 2005 Survey of Connecticut Businesses, released today by the Connecticut Business & Industry Association (CBIA) and Blum Shapiro, the largest regional accounting firm in the state, based in West Hartford. Manufacturing executives said state government should be doing more to make it possible for them to remain competitive in today’s global marketplace. More than half of the respondents (57 percent) said that lowering the cost of doing business in the state should be the top priority of state government, followed by cutting state spending to hold down tax increases (18 percent), making business loans and other incentives available to remain in the state (7 percent), and easing the regulatory burden of doing business in the state (7 percent). “The survey confirms that manufacturers are doing their part to be competitive in the global marketplace, but they need relief,” said Kenneth O. Decko, CBIA’s president and CEO. “It’s now imperative for the state to do what it can to allow manufacturers to succeed in Connecticut and help lower business costs here, which are the fifth-highest in the country, according to two recent national studies.” Executives said high business costs affect the future viability, expansion and relocation efforts of manufacturers in the state. Respondents said the state could improve their companies’ competitiveness by reducing taxes and offering tax credits (39 percent), lowering the overall cost of doing business (19 percent), encouraging business investments (14 percent), simplifying and repealing state laws (7 percent) and lowering health care costs (6 percent). For the second straight year, the affordability of health care benefits for their employees was the greatest cost concern of manufacturers, and they believe the health care crisis will worsen. Two-thirds of respondents (66 percent) said health care costs are the most significant cost concern facing their companies, followed by workers’ compensation costs (12 percent), labor costs (9 percent) and payroll costs (6 percent). Seventeen percent of executives expect health care benefit costs to increase more than 20 percent over the next 12 months, 59 percent believe costs will rise by 10 percent to 20 percent, 27 percent think they will increase by less than 10 percent, and only 1 percent believe health care costs will decrease. “Manufacturers are using numerous strategies to offset rising health care costs, and continue to innovate and implement new products, processes and services necessary to remain competitive,” said John M. Kirschner, partner and director of the manufacturing group for Blum Shapiro. On the positive side, respondents said there are several advantages to doing business in Connecticut including the state’s high personal income (22 percent), the state’s skilled workforce (17 percent), location (9 percent), quality of life (9 percent) and the education system (6 percent). Only 8 percent of manufacturers said there is little or no benefit to operating in Connecticut, down from 16 percent in 2004. But those advantages are not enough to result in job growth. Twenty-nine percent of manufacturers said that they have current job openings for which they are unable to hire full-time employees. Executives said workforce growth is being held back by the lack of qualified workers (11 percent), the rising cost of health benefits (11 percent), a decrease in business (8 percent), and the use of temporary employees (8 percent). Executives said the hardest-to-fill positions include skilled machinists (47 percent), engineers (17 percent), managers (11 percent), sales people (10 percent), and entry-level positions (7 percent). Global trade is becoming a major part of manufacturers’ business as they move to strengthen and grow their companies. Sixty percent said they are participating in the global market, up from 55 percent last year. Manufacturers’ involvement in the global economy is expected to increase further. Firms exporting more than 25 percent of their sales now expect their exports to grow an additional 17 percent to 29 percent over the next five years. “Despite the tough challenges and ferocious cost competition of the global marketplace, the survey shows that Connecticut manufacturers are running their businesses better than ever,” said Peter Gioia, CBIA economist. “But, if we desire a strong manufacturing presence in Connecticut that grow, then the state must mitigate government-influenced costs and encourage a strong business climate that is globally competitive.” Manufacturing facts Manufacturing is an integral part of the state’s economy. More than 5,300 manufacturers are located in Connecticut, employing nearly 200,000 workers. These companies generate $11.1 billion in wages and salaries, and produce over $20 billion of the gross state product. Each new manufacturing position creates between 1.2 and 5 additional jobs in the state, and manufacturers purchase over $10 billion per year in goods and services from other Connecticut businesses. CBIA is the state’s largest business organization, with more than 10,000 members. ### Editor ’s Note: For a copy of the survey, visit www.cbia.com/newsroom/surveys. To arrange an interview with Peter Gioia, CBIA economist, or For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com. 350 Church
Street · Hartford, CT 06103-1126 · cbia.com/newsroom
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